Germany - why are they only ones enjoying the Euro?

User id CG3	August 18th 2014
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GERMANY - WHY ARE THEY ONLY ONES ENJOYING THE EURO?

In the 15 years of the Euro, the German GDP growth rate has consistently out-performed the EU average. Not that surprising, considering that the European Central Bank closely reflects Bundesbank thinking.

The Euro has solved the German conundrum that too great a trading surplus would cause a correction as the Mark would become uncompetitive. Now the Eurozone artificially suppresses the natural market forces, and Germany can run a perpetual surplus in Euros.

What has the Eurozone got from this? Greece is a clear loser, but the punitive economic policies have impacted on many other countries, with a resultant capital flow to the safe haven of Germany - the country responsible for applying the restraints.

Ultimately Germany still requires a healthy Eurozone to buy its goods, and the recent faltering in German GDP growth is linked to the poor performance of its Euro partners.

There is a tremendous reservoir of goodwill amongst the politicians of Europe towards the EU, with its success in bringing sustained peace and social improvements, but the future success of the Euro seems dependent on a greater emphasis on shared prosperity to avoid voters in the failing countries seeing the Euro as the problem rather the solution.

http://www.tradingeconomics.com/euro-area/gdp-growth

User id RM1	August 20th 2014
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Nice post Chris

You made a good point about the old German Mark becoming uncompetitive if they (The Germans) had not created the Euro.

The proof of your argument was seen in the price action of the Swiss Franc a few years ago in 2010 and 2011. It was seen as a safe haven in a country with a strong economy and everybody piled in to buy it. This was at a time when QE was going on in many other economies.

Whilst this made holidays abroad very nice and cheap for the Swiss, it made their products so expensive to the rest of the world that they ended up pegging to the Euro at the end of 2011 to stop the price rising futher.

It was quite funny at the time as I was long CHF V USD and remember three points very clearly.

1. I couldnt believe how hard and fast the move up was
2. Everyone on CNBC was saying \"No the Swiss will never peg to the Euro, its just political talk made in a move to shake out the speculators\" 
3. Then there were those who had bought the Franc at the end of its huge rise, who got killed in the markets on the subsequent violent price reversal.

There was a lot of bad language in the forex forums at that time!